How fast is the UK labour market slowing?

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Britain's labour market has been cooling in recent months, with rising unemployment, less hiring and fewer job vacancies — but wage growth has shown much less sign of following suit.

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13 Sep 2023

This is a problem for the Bank of England, which has said that slower wage growth is needed for it to be confident inflation will return to its 2% target from a current level of 6.8%, the highest of any major economy.

New official data on Tuesday showed the joint-fastest growth in regular pay on record, twinned with the biggest slump in employment since 2020 and a rise in the jobless rate to its highest since 2021.

Financial markets widely expect the BoE to raise interest rates next week to 5.5% from 5.25%, but are split over whether that will mark the end of a tightening cycle which began in December 2021.

Four graphics below illustrate where Britain's labour market is at.

Britain's unemployment rate rose to 4.3% in the three months to July, up from 4.2% in the second quarter and 3.5% in August 2022 — its lowest in nearly 50 years.

Unemployment is already above the